Zambia sets mining royalties at 9 pct - presidency source

* Plan aims to prevent looming job cuts, mine closures

* Lungu ordered ministers to resolve royalties row (Adds Barrick Gold, Vedanta unit comments)

By Chris Mfula

LUSAKA, April 14 (Reuters) - Zambia has proposed scaling back newly imposed mining royalties for open pit mines, a source in the presidency said on Tuesday, bowing to industry and union pressure to prevent job cuts and mine closures in Africa's second biggest copper producer.

Zambia's decision to increase royalties for open pit mines to 20 percent from 6 percent and those for underground mines to 8 percent from 6 percent in January had rattled unions and miners, forcing the government to review the plan.

"We are reverting to the 2014 mining tax regime except that the mineral royalty will now be at 9 percent across the board," the source told Reuters.

The source said the proposed changes also included the re-introduction of a 30 percent corporate income tax which was abolished in the 2015 budget. The source gave no further details.

The country's tussles with miners over royalties and value added tax (VAT) have threatened investment and growth in one of Africa's most promising markets and come at a time of weak copper prices, which hit 5-1/2 year lows in January.

Zambia's cabinet approved changes to the royalties on Monday after consultations with the mining industry, but it did not give details.

The cabinet will discuss the details next Monday before they are presented to parliament for approval at a later date that was not immediately disclosed.

Both Barrick Gold Corp, which operates the Lumwana open pit copper mine, and the local unit of London-listed Vedanta Resources (Other OTC: VDNRF - news) cautiously welcomed the proposals.

"We will review the government's formal proposal in detail when it becomes available," spokesman Andy Lloyd told Reuters in Toronto.

Barrick warned in December that it would suspend operations at Lumwana due to the royalty rate hike, which it said would make the open pit mine uneconomic.

But it said last month it would continue operating Lumwana, while awaiting changes to the royalty tax.

Shapi Shachinda, spokesman for Konkola Copper Mines (KCM), said the company was "waiting to see the detail when the new proposal is presented to the parliament for approval".

KCM owns Nchanga underground, Nchanga open pit, Konkola Mine and the flagship Konkola Deep Mining Project.

Miner and trade house Glencore (Xetra: A1JAGV - news) and Canada's First (Shanghai: 603806.SS - news) Quantum Minerals, which also have operations in Zambia, did not immediately respond to requests for comment.

Zambian President Edgar Lungu last month directed the finance and mining ministers to amend the royalties by April 8, saying the southern African nation could consider temporarily reverting to the 2014 tax regime.

Lungu vowed that no jobs would be lost due to the dispute with mining firms over the royalties.

(Additional reporting by Nicole Mordant in Vancouver; Editing by James Macharia and Susan Thomas)